Archive for category: New Product

You are here: / New Product

Dallas-Fort Worth Tops The Nation In Medical Office Building Development

/in , , /by

Dallas-Fort Worth (DFW) had the nation’s highest rate of medical office building (MOB) completions from Q3 2017 to Q2 2018, according to a new report from CBRE.

MOB construction deliveries totaled 954K SF during that period, with another 95K SF of medical space still under construction as of the last half of 2018.mob

“Even development that robust doesn’t add up to overbuilding, at least not yet,” according to CBRE Senior Vice President, Global Workplace Solutions Jordan Buis. “Although we’ve seen growth in DFW healthcare developments over the past decade, I believe the market is stable. We’ve seen healthy demand from tenants to keep up with the new supply, and developers aren’t overbuilding. The population boom in DFW is driving the need for new medical product, especially in the suburbs.”

The recent volume of deliveries continues a longer-term pattern of growth for the Metroplex, the report said. From Q1 2010 to Q2 2018, DFW delivered more than 2.7M SF of new medical office space, second only to the Houston market, which delivered in excess of 3.5M SF of MOB space in the same period.  Medical office rents in the Metroplex increased 2.1% from Q2 2017 to Q2 2018 to $27.43/SF, even as the vacancy rate rose 180 basis points to 23.3% over the same period.

“As rents continue to rise and reimbursements continue to decline for the healthcare providers, it will be interesting to see if there’s a point of inflection in the near future,” Buis said.

The surge of MOB development in the Metroplex comes as health systems nationally are increasingly turning to outpatient centers due to higher capital costs and a surge in high-deductible health plans requiring patients to pay larger out-of-pocket amounts.

The total number of outpatient centers nationwide grew more than 50% from 2005 to 2016 to about 41,000 properties, according to CBRE. Outpatient center employment has more than doubled since 2003, and grew 3.5% year over year in October 2018, compared with 2% annual growth in overall healthcare employment.

Medical City Frisco Expansion (PHOTO CREDIT: Medical City Frisco)

In DFW, the most recent example of outpatient development — though close to a traditional hospital — just broke ground at Medical City Frisco.   The facility will be a medical office building with an ambulatory surgery center totaling about 150K SF and connected to Medical City‘s main hospital by a skybridge. The development will include 11 operating rooms, 53 patient rooms and office space. The $37M project is expected to be complete by spring 2020,”

“The development is anticipating future demand for leading-edge medical treatment,” Medical City CEO Charles Gressle said in a statement.

Last year, the hospital expanded its women’s services unit, which includes 13 delivery and recovery rooms, and features a six-bed, Level II neonatal intensive care unit with three dedicated cesarean section operating rooms.

 

Source: Bisnow

Report: The Demand Drivers For Life Sciences Commercial Real Estate

/in , , /by

The investment and employment levels in the life sciences sector of commercial real estate has significantly risen according to Cushman & Wakefield’s new report, Life Science: Great Promise & Rapid Growth.

With the rapid influx of venture capital as well as billions of dollars in funding from the National Institute of Health, the life sciences sector has grown nearly five times as fast as the economy since 2000, adding 85,000 jobs, with roughly 70% of that job growth in the past eight years.

A significant driver of this growth is an aging population with increased longevity. By 2030, there will be 73 million Americans aged 65 or older, equating to 20.6% of the population, compared with 40.5 million Americas in this cohort in 2010. Demand for health services will continue to soar as the population ages and the technology enabling life science will continue to lead to a greater supply of new products, which in turn results in historically high investments in this sector.

“Life sciences is generally the industry that includes pharmaceuticals, biotechnology, medical devices, agbio (food), biofuel and biochemicals (fuel and industrial chemicals via biological processes). As evidenced by Elon Musk and others, there will be another very complicated and converging era wherein tech and biology are merged to enhance human (and animal) mental and physical capabilities and function,” says Greg Bisconti, Executive Director and leader for the Americas Life Sciences Practice Group, Cushman & Wakefield.

According to the report, lab space vacancy is 8.4% the 11 (life-science heavy) U.S. markets, well below the national office vacancy rate of 13.3%. Across the U.S., the average lab space rent has increased 33.2% in the past decade, compared with a 17% increase for U.S. office space. In extreme cases like the Boston/Cambridge area, NNN asking rents hover around $88 per square foot (psf), a 70.4% increase over the past 10 years.

The look and layout of lab space varies widely from user to user but it is generally heavy on lab-to-office ratio (70/30) at the start-up stage. That lab ratio tends to go down as a company has a product and other office functions such as clinical (clerical side) and sales grows faster than the research and development (R&D) side. The science of any given company guides its needs from biology to chemistry to a mix.

There are many companies with no lab space at all and who might entirely outsource their R&D functions. On the other side, there are large pharmas that will have a large R&D operation that is 60-70% lab. Lily (300,000 square feet), Celgene (350,000 square feet) and Takeda (165,000 square feet), for example, follow these metrics, Bisconti tells GlobeSt.com.

These life science labs are typically located in a suburban setting at established life science hubs such as Cambridge in Boston, the San Francisco Peninsula and San Diego. New York City, however, is setting a new standard for a high-rise urban life sciences presence. Life sciences hubs share a few commonalities such as major universities, research institutes, access to capital and proximity to water (which probably speaks to the lifestyle and a quality-of-life of scientists).

The universities, of course, provides the brainpower. Research institutes have now added government funding to that brain power, which leads to developing intellectual property and innovation. These areas tend to have clusters of wealthy angels, venture capitalists, hedge funds plus conventional banks.

“Essentially the tech area of healthcare, life sciences has been, and will continue to be, a major growth driver for the U.S. economy for decades,” says Bisconti.

 

Source: GlobeSt.

UCHealth Plans New 11-Story Tower In $388 Million Aurora Expansion

/in , /by

UCHealth University of Colorado Hospital  plans to build an 11-story tower at its location at Anschutz Medical Campus in Aurora, a roughly $388 million expansion that will add 103 inpatient beds.

Read more